In little less than three weeks from now, Arvind Subramanian, chief economic adviser (CEA), will formally bid adieu. He will be remembered for many things (some worth forgetting too); but if there is one standout contribution, it is his incredible ability to frequently add to the political economy lexicon of India.

My personal favourite is “stigmatized capitalism”. An observation which helps us understand the hypocrisy bedevilling Indian polity and public policy speak.

In his exit interview published last week in Mint, Subramanian, dwelled on this concept in the context of explaining the inexplicable urgency among the powers that may be to palm off the ailing IDBI Bank to the Life Insurance Corp. of India (LIC).

“My hypothesis is that India is affected by stigmatized capitalism, where there is not enough trust in the private sector or in the ability of the state to regulate the private sector. It is making it much more difficult to give the private sector a bigger role. It is easier to give a public or a quasi-public entity a bigger role rather than getting more private sector participation,” Subramanian had said.

The outgoing chief economic adviser is spot on. Hawking the ailing government-owned bank to the private sector will make economic sense, but could be a potential political self-goal too, especially given that the drumbeats for 2019 Lok Sabha elections have begun.

After all the “suit-boot ki sarkar ” (pro-rich government) jibe from Congress president Rahul Gandhi had put the incumbent regime headed by Narendra Modi on the defensive. To its credit, this government led by the Bharatiya Janata Party (BJP) has been the most pro-business regime in India (replacing the exception-based norms with a rules-based regime defined around ideas such as the goods and services tax and resolution of the bad-debt problem of banks through an institutional mechanism), but has always been careful to be perceived as pro-poor (and of late pro-farmer).

Clearly, there is a stigma around India Inc. Pop culture, like films in Bollywood, have always portrayed industrialists in a negative light; the kind, who in consort with corrupt politicians, created a shortage of essential goods to indulge in price gouging. Over the years this negative perception of big business has only become more acute with inequality of incomes having cropped up as the new policy challenge.

How did things come to such a pass?

It is unfair to blame it all on India Inc. Inevitably the blame should rest on the enabling ecosystem. The facade of socialism—built around election-winning political slogans such as “garibi hatao”—justified a regime of control, especially with respect to industry. In this regime, like say, in the former Soviet Union, nothing was possible without a consent from the government; power begets a web of corruption. This is the nexus that fostered the idea of crony capitalism.

The tragedy of the India development story is that even well after the control regime was dismantled beginning in 1980—and then with a big burst in 1991—this nexus survived. The big fight for natural resources that broke out as India began to discover its growth rhythm in the new millennium, is the source of the scandals that overwhelmed the Congress-led United Progressive Alliance.

As Subramanian points out, when the bad debt problem surfaced, this negative perception about big businesses only worsened as it came to light that Indian promoters had “very little skin in the game”—to put it more bluntly it was “capitalism without equity”.

It is exactly such a backdrop that allowed the Narendra Modi regime to push through demonetisation of high-value currency notes. Even though its economic logic was suspect, it was a political success (so manifest in the BJP’s sweep of the assembly polls in Uttar Pradesh in 2017 despite the opposition making it a key electoral issue) as most believed that it was restoring the premium on honesty by targeting the corrupt (it is another matter that they escaped the dragnet taking advantage of a hollowed out system).

True, but it is also making it politically lucrative for populists. Addressing the curse of stigmatized capitalism will be key to restoring balance to public policy.

But bridging the trust deficit built over so many decades is easier said than done.

Anil Padmanabhan is executive editor of Mint and writes every week on the intersection of politics and economics.